You and four other people are to place bids for an object...

You and four other people are to place bids for an object, with the high bid winning. If you win, you plan to sell the object immediately for $10,000. How much should you bid to maximize your expected profit if you believe that the bids of the others can be regarded as being independent and uniformly distributed between $5,000 and $10,000?

Suppose we are interested in bidding on a piece of land and we know one other bidder is interested. The seller announced that the highest bid in excess of $9,600 will be accepted. Assume that the competitor's bid x is a random variable that is uniformly distributed between $9,600 and $15,200. a. Suppose you bid $12,000. What is the probability that your bid will be accepted (to 2 decimals)? 0.43 b. Suppose you bid $14,000. What is the probability that your bid will be accepted (to 2 decimals)? 0.83 c. What amount should you bid to maximize the probability that you get the property (in dollars)? 15000 d. Suppose that you know someone is willing to pay you $16,000 for the property. You are considering bidding the amount shown in part (c) but a friend suggests you bid $12,800. If your objective is to maximize the expected profit, what is your bid? Bid $12800 to maximize the expected profit What is the expected profit for this bid (in dollars)? 1000

Lucas F.

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